Negotiated professional fees are lower among primary care physicians practicing in independent settings than for those who are affiliated with hospitals or private equity, according to a recent study.
The analysis, headed by Brown University School of Public Health researchers, reviewed evaluation and management office visit charges from 2022 as negotiated by Aetna, Blue Cross Blue Shield, Cigna and UnitedHealthcare. In total, the group reviewed 226.6 million prices from about 198,000 PCPs as well as changes in those physicians’ ownership over time.
In line with other surveys and studies, the researchers found a decline in the portion of PCPs at independent practices from 2009 to 2022.
Specifically, the share of hospital-affiliated PCPs grew from 25% to 48% while private-equity-affiliated PCPs grew from less than a quarter of a percent in 2013 to 1.5% by 2022.
Geographically, the two groups tended to have low overlap. North Dakota and Wisconsin having the highest proportion of hospital-affiliated PCPs (86% and 83%). Florida (6%) and Texas (3%) had the highest proportion of PCPs in PE-acquired practices, a noteworthy concentration in contrast to their low overall penetration but “emerging” growth.
As for the prices, office visits in 2022 were nearly 11% higher at hospital-affiliated PCPs compared to their independent counterparts. The researchers estimated that commercial office visit spending within the sample neared $10.9 billion, but would decrease by about 15% ($1.5 billion) if those same visits were set at mean independent office PCP prices, or 18% ($1.8 billion) using mean prices and service complexity.
“Given that price differences across care settings are more likely to be attributable to market factors than quality, if a desired policy goal is to reduce healthcare spending, hospital-physician vertical integration may deserve similar levels of policy attention as is currently received by PE,” the researchers wrote in JAMA Health Forum.
As for PE, prices at those PCPs were 8% higher than among those at independent practices, according to the analysis. Though the finding is consistent with other research tying PE’s add-on acquisitions and higher prices, the team was “unable to rule out another plausible explanation” of the firms strategically targeting high-priced platform practices in a “roll-up scheme” as alleged by the Federal Trade Commission.
“On the other hand, given the recency of PE affiliation of PCPs relative to hospital affiliation, it is possible that PE might result in even higher prices than those currently observed as firms continue to embark on roll-up consolidation of smaller practices,” they speculated. “Taken together, our study highlights the need for greater monitoring and transparency of corporate consolidation of physician practices, including by PE firms.”
The researchers noted that their analysis of negotiated prices does not determine causality and does not directly examine and explain potential mechanisms for the price increases—though other evidence suggests that increased market power as compared to the commercial insurers drives prices and is “one significant reason that physician practices continue to be attracted to corporate ownership.”
“A key question that remains unanswered is whether revenues from higher prices negotiated by hospital-affiliated and PE-affiliated practices result in improved outcomes for patients and/or clinicians,” they added.
Provider consolidation and PE investments have become topics of discussion among policymakers and regulators. A federal report released last week summarizing public comments from a request for information, for instance, highlighted evidence that both trends are driving higher prices and, potentially, lower quality care. It also underscored calls from the public and researchers for greater transparency in provider ownership.